Credit Repair

How to Establish the Credit Worthiness of Your Company – A 5-Step Guide to Building Corporate Credit

When it comes to establishing the credit worthiness of your company so that your new business can grow to its full extent, you must have an in-depth understanding of the various aspects associated with corporate credit. Before you apply for business loans, make sure you thoroughly review the credit situation of your company. If it is not at par, you must first implement certain strategies to improve the same. It is not advisable at all to use your personal credit to finance your business. A serious entrepreneur should always consider business as a separate entity. You must learn how to keep your personal and business activities separate, especially when it comes to money. Following is a brief rundown on how you can establish the of your company.

Business Credit Assessment

Business credit assessment is a process, where you do a thorough analysis of all relevant components in order to determine the different types of credit that your company needs. This step is crucial for those who want to start a real business, not just a shell company. Separating your personal credit from corporate credit is also essential; you can do this by obtaining a Federal Tax ID number from the IRS.

Contact Details of Your Company

It is good that your company has a registered name, but does it have a physical address, telephone numbers, and other contact details? If not, establish the same. There are certain legal requirements that you have to meet in this regard. The laws vary from one state to another. So, make sure you contact the concerned state department to find out specific requirements. You will have to pay certain fees to the city, state, and federal governments in order to acquire appropriate licenses and permits. If it is a corporation, you will need a Data Universal Numbering System (DUNS), which you can get by contacting Dunn and Bradstreet.

Business Credit Lines

Depending upon the size of your business, you may also need to establish business credit lines of around $500 to $5000. While you are contacting lenders for this purpose, you should first request them to provide you free, no-obligation quotes. Compare the different offers, especially the rates and fees. You will also have to look for vendors who offer corporate credit for business furniture, computers, office supplies, and other such things.

Build a Payment History

The payment history contributes to 35% of credit score. Make sure you are making the monthly payments in a timely manner. Late payments or defaults will adversely affect your credit. On the other hand, a good early payment history will help your company develop an impressive credit profile right from the very beginning. You can easily qualify for bigger credit lines and loans if you are current on your monthly payments for the next 6 months. In order to ensure timely repayment, you can establish a Paydex accounting system to payback your lenders. Make sure that all companies that you are making the repayment to are reporting on-time payments to the credit bureaus. It will give a significant boost to your .

Get Larger Credit Lines

Once you are through with the above four steps, the next step is to apply for larger credit lines and loans. At this stage, you can easily qualify for credit lines of around $5,000 to $50,000. You just have to repeat the same process again. This will further improve the credit worthiness of your business. After another six months, you can move up again and qualify for unsecured debts in the range of $50,000 to $250,000.

Within a year, your business can have a very strong credit profile. Things can be quite easier for you during this period while you are making efforts to build corporate credit, provided you have a great business plan that can easily convince your lenders and vendors that your business is going to be very profitable and that it has great potential for growth.

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One Response to “How to Establish the Credit Worthiness of Your Company – A 5-Step Guide to Building Corporate Credit”

  1. Albert says:

    The article is very informative for a new businessmen or women. It can give us the information how to get our company’s federal Tax ID number, DUNs, credit loans etc. The point about payment history is also important because it is equally important for a normal person to a company’s owner to build a good payment record. You should pay all your bills regularly and will help you to get a good credit score for your company.

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